Valero: Q1 Loss for Ethanol Segment, Profit for Renewable Diesel

by Erin Voegele (Biomass Magazine) Valero Energy Corp. released first quarter 2020 financial results on April 29. While the company’s operations are being impacted by the COVID-19 pandemic, members of the executive team confirmed that demand for transportation fuels is beginning to rebound.

Gorder (Joe Gorder, chairman and CEO of Valero) said Valero has temporarily idled several of its ethanol plants and has reduced the volume of corn being processed at its operational facilities in order to address the decreased demand for ethanol. Ethanol production volumes for the first quarter, however, averaged 4.1 million gallons per day, which is in line with production levels reported for the first quarter of last year.

Valero’s ethanol segment reported a $197 million operating loss for the first quarter of 2020, compared to $3 million in operating income for the same period of 2019. The decrease in operating income was primarily attributed to lower ethanol prices and higher corn prices.

While Valero’s ethanol segment has been highly impacted by COVID-19, the impacts to its renewable diesel operations have not been as severe. Gorder said progress is continuing on the Diamond pipeline expansion and the Diamond Green Diesel project, both of which are expected to be complete in 2021, he said. Capacity at the Diamond Green Diesel facility is being expanded to 675 MMgy. “The Diamond Green Diesel joint venture also continues to make progress on the advanced engineering review of a potential new renewable diesel plant at our Port Arthur, Texas, facility,” Gorder said.

Valero’s renewable diesel segment reported $198 million in operating income for the first quarter of 2020, compared to $49 million for the same period of last year. After adjusting for the retroactive blenders tax credit, renewable diesel operating income was $121 million for the first quarter of 2019. Renewable diesel sales averaged 867,000 gallons per day during the first quarter, an increase of 77,000 gallons per day when compared to the same period of last year.

Overall, he (Gary Simmons, executive vice president and chief commercial officer at Valero) said Valero expects to see a gradual increase in transportation fuel demand, and does think demand will return close to where it was pre-COVID-19. While many people will continue to work from home, and as a result use less fuel, he said other factors will likely offset that decrease in use. For example, people are expected to drive more and use mass transit less. READ MORE